Whether Input Tax Credit available on purchase of Ambulance for employees of the Company?

Whether Input Tax Credit available on purchase of Ambulance for employees of the Company?

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Whether Input Tax Credit available on purchase of Ambulance for employees of the Company?

 

Nipha Exports (P.) Ltd – ORDER NO. 43/WBAAR/2018-19 – Dated 26-02-2019 – AAR West Bengal

Availability of ITC is one of the key controversial issue in GST.

In the present case, Application waa having factories in Howrah and Hooghly for manufacturing agricultural machinery and has purchased an ambulance for the benefit of the employees, as required under Section 45(4) of the Factories Act, 1948.

The Applicant claimed credit for the input tax paid on inward supply of the ambulance is for credit under the Second Proviso to Section 17(5)(b) of the GST Act, as amended w.e.f. 01/02/2019.

 AAR ruled as under :

Eligibility for claiming input tax credit under section 16(1) is subject to the provisions of law at the time of occurrence of the taxable event, irrespective of when the claim is made.

Second proviso to section 17(5)(b) of the GST Act, as it stands post amendment effective from 01/02/2019, is not applicable to a transaction made in November 2018.

 It is evident from above that input tax credit on inward supply of ambulance, being a motor vehicle, is not admissible under Section 17(5)(a) of the GST Act. The exception carved out under Section 17(5)(b)(iii)(A) of the GST Act for services which are obligatory for an employer to provide to its employees under any law for the time being in force is limited only to rent-a-cab, life insurance and health insurance.

Input tax credit is not admissible on the ambulance purchased in November 2018, as Section 17(5) of the GST Act, as it stood in the relevant period, blocks any such enjoyment, even if provisioning of ambulance service to the employees is obligatory under the Factories Act, 1948.

However, in such cases, Appellant can explore credit of ITC under exception provided section 17(5)(a)(i)(B) – transportation of passengers as dictionary meaning of “passenger” is ‘a person who is travelling in a vehicle but is not driving it, flying it, or working on it’.

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